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The global financial crisis is hitting Japanese companies hard. Symbolic is Toyota Motor Co.’s prediction of its own business performance for the full year to March 2009. The rise of the yen’s value and the slowing down of the world economy as seen in decreased auto sales in the United States and Europe has led Japan’s leading automaker to predict a ¥600 billion group operating profit for fiscal 2008, down 73.6 percent from the ¥2.27 trillion it logged the year before. The figure is even lower than its previous forecast of ¥1.6 trillion. Toyota’s group operating profit sinks below ¥1 trillion for the first time since the business year to March 2001. It also revised its forecast of sales downward from ¥25 trillion to ¥23 trillion.

According to Shinko Research Institute, 694 non-financial firms listed in the first section of the Tokyo Stock Exchange saw their recurrent profit in the April-September period sink by 21.8 percent and net profit by 25 percent from a year before. (Manufacturing firms’ recurring and net profit went down by 26.3 percent and 30.5 percent, respectively, while that of nonmanufacturing firms went down by 12.6 percent and 13.8 percent, respectively.) The 694 firms expect a 25.6 percent decline in their recurrent profit and a 27 percent drop in their net profit for the whole business year to March 2009.

Unemployed people who are looking for jobs are hit hard. The ratio of registered job openings to registered job applications declined for eight consecutive months and came down to 0.84 in September, the lowest in four years and one month. Export-oriented companies including auto and electronic manufacturing companies have started firing nonpermanent workers.

Although the government has decided on an economic stimulating package, it will take some time to implement it, and a cash benefit for the household sector included in the package is unlikely to increase personal consumption. Companies need to tide over the current situation by developing attractive products and services and through management rationalization that does not rely on dismissal of employees.

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